How can you best balance the relationship-based dynamics of an estate plan with the transactional elements, while maintaining harmony within the family? Experts say it\u2019s less about what you give your heirs, and more about how you handle the estate and their expectations. The process begins with making sure you have a will and it\u2019s been updated so your wishes are communicated as needed.<\/p>\n
\u201cIt sounds silly, but you\u2019d be amazed at how many people don\u2019t do this,\u201d says Catherine Walker, a trust consultant with RBC Wealth Management.<\/p>\n
With her clients, Walker recommends revisiting the estate plan once a year after Thanksgiving, a time when families often get together.<\/p>\n
\u201cSit down and spend three minutes looking at each other and saying, \u2018Do we need to change anything this year? Has anyone been married or divorced or had children?\u2019 We see people who haven\u2019t changed their documents in 15 or 20 years. It\u2019s the number one problem.\u201d<\/p>\n
Walker says many families see estate planning as a taboo subject, but shouldn\u2019t.<\/p>\n
\u201cRemember: You aren\u2019t doing the estate planning for you. You\u2019re doing it for the family,\u201d Walker says. \u201cYou\u2019re trying to make their lives a lot easier when you aren\u2019t here to help them anymore.\u201d<\/p>\n
Today\u2019s estate plans are also more complicated because of the new, modern family. That can include second and third marriages as well as stepchildren.<\/p>\n
Walker recommends trusts as a way to divvy up assets in more detail and over specific time periods. An example is if a husband passes away and wants to ensure his second wife receives some assets now and his kids when they\u2019re older.<\/p>\n
\u201cTrusts are great,\u201d says Walker. \u201cWith a will you say who gets what. With a trust you say who gets what, when and how. When you are creating a trust account you\u2019re looking at a blank sheet of paper. You can get creative with them.\u201d<\/p>\n
Walker is a fan of incentive trusts, where the money is based on a specific achievement such as obtaining a degree, kicking a harmful habit or matching income earned in a given year. That way the children stay motivated to continuously improve themselves, instead of relying on an inheritance to fund their lifestyle.<\/p>\n
What\u2019s more, the assets don\u2019t have to be split equally among children, Walker says. However, she warns that could cause a rift between siblings if the decision isn\u2019t explained. For example, parents may wish to give a child with a long-term disability more of the assets to fund the cost of health care, or provide more to a child who is a single mother.<\/p>\n
More families are also leaving their money to charities, as well as their children. Consider how billionaire investor Warren Buffett has decided to distribute his assets when he passes away. Buffett is known for saying, \u201cA very rich person should leave his kids enough to do anything but not enough to do nothing.\u201d<\/p>\n
He has made it clear his kids will get some money when he dies, but he plans to give the majority of his wealth to charity. Buffett helped to create the Giving Pledge, an organization that encourages ultra high net worth individuals to leave more of their fortunes to non-profit organizations, instead of just family.<\/p>\n
Many parents want their kids to understand and appreciate wealth should be shared and\/or used to further a business or organization, says Dr. Johnben Loy, a family therapist, founder and clinical director at the Rekindle Centre for Systemic Therapy located in Desa Sri Hartamas, Kuala Lumpur.<\/p>\n
For example, some parents may want the inheritance money to be used to further a family legacy, whether it\u2019s a business or maybe a charitable organization. Loy also recommended a trust could be set up with conditions that need to be met before the money is accessed.<\/p>\n
\u201cThis is about more than just passing down wealth. It\u2019s about what you want to do with your wealth,\u201d says Loy. \u201cIt\u2019s about building on a legacy, values, skills and capabilities.\u201d<\/p>\n
According to latest China Private Wealth Report, about two-thirds of high net worth individuals in China see “wealth preservation” as their top wealth objective. That is followed by “wealth inheritance,” which has risen from the fifth priority in 2013 to the second in 2014, especially among the ultra-high net worth individuals, according to the report developed by Bain & Company and China Merchants Bank.<\/p>\n
The report also found wealth inheritance has \u201ctaken on new meaning beyond passing on material wealth and financial planning.\u201d For example, the report says 65 per cent of respondents also want to leave a legacy of spiritual wealth, which includes a strong work ethic, the importance of education and family values.<\/p>\n
Loy recommends parents start the inheritance discussion with their kids at a young age, making sure the expectations are clear. And, if those expectations change over time, they should be regularly communicated to the beneficiaries.<\/p>\n
\u201cThat also means having clear boundaries about what can and cannot be transferred,\u201d Loy says.<\/p>\n
Ignatius (Iggy) Chong, Managing Director of Greater China at RBC Wealth Management, says the key to keeping the peace with estate planning is clearly communicating your wishes \u2013 and not keeping any secrets.<\/p>\n
\u201cThe worst is where it comes out that something has been hidden. That usually is a recipe for disaster,\u201d says Chong. \u201cOften, it comes down to simple communication.\u201d<\/p>\n
He recommends parents communicate the passage of wealth as a duty for the next generation to properly maintain.<\/p>\n
\u201cIt\u2019s not about who gets the house, the car or the art collection,\u201d says Chong. \u201cIt\u2019s coming at it from the viewpoint that your kids are really stewards of your wealth for future generations. They aren\u2019t passing on ownership, but instead a sense of responsibility.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
There are few decisions that have the power to stir up emotions within a family quite like those in an estate plan. Who inherits what, how m…<\/p>\n","protected":false},"author":0,"featured_media":1132,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rbcwm_post_date":"","editor_notices":[],"rbc_url_alias":"","rbcwm_featured_desktop_image_position":"","rbcwm_featured_mobile_image_position":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[255,80,90,124,256,257,232,258,259],"rbcwm_content_owner":[],"rbcwm_need":[209,216,210],"rbcwm_segment":[206],"rbcwm_solution":[220,208],"rbcwm_topic":[215],"rbcwm_channel":[],"rbcwm_format":[],"class_list":["post-1130","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-transfer","tag-business-succession","tag-estate-planning","tag-family-finances","tag-family-wealth-transfer","tag-fiduciary-services","tag-investment-advice","tag-investment-management","tag-new-wealth","tag-wealth-transfer","rbcwm_need-grow","rbcwm_need-live","rbcwm_need-protect","rbcwm_segment-individuals-and-families","rbcwm_solution-trusts","rbcwm_solution-wealth-planning","rbcwm_topic-your-wealth"],"acf":{"rbcwm_subtitle":"There are few decisions that have the power to stir up emotions within a family quite like those in an estate plan. Who inherits what, how much and when can be controversial issues during a transfer of wealth between generations.","rbcwm_post_author":[],"rbcwm_custom_breadcrumb_text":"","rbcwm_custom_breadcrumb_link_url":"","rbcwm_disclaimers":{"add_disclosures":["No"],"perspective_disclaimer":["No"],"expandable":[],"omit_from_pages":[],"disclaimer_footnote":""},"rbcwm_insight_cta_id":8376,"rbcwm_pagination":{"next_link":"","next_link_text":"","previous_link":"","previous_link_text":""},"rbcwm_video_duration":"","article_time":"","rbcwm_enable_toc":false,"rbcwm_toc_selector":"h2"},"yoast_head":"\n